Powering Japan’s future

The pros and cons of Japan's renewable energy options

Last year, Japan produced close to one quadrillion watt-hours of electricity — that’s 1 followed by 15 zeros. The vast majority of that — which translates into one billion megawatt hours (MWh) — came from coal, natural gas and nuclear power plants operated by 10 utilities that, only a few months ago, seemed unshakably powerful.

Now, though, Japan’s energy future looks quite different.

Following multiple meltdowns at the Fukushima Daiichi nuclear power plant since the Great East Japan Earthquake and tsunami on March 11, its operator, Tokyo Electric Power Co. (Tepco), the country’s biggest utility, is facing financial disaster.

Public support for nuclear power has also plunged, and climate change continues to cast a shadow over the prospect of more coal-fired plants.

This May, with politicians, pundits and protesters calling for safer sources of power, Prime Minister Naoto Kan proposed a goal of generating 20 percent of electricity from renewable sources by the early 2020s (the figure is around 9 percent today, including big hydroelectric plants). The Diet is currently debating legislation that would push the country in that direction.

But can Japan, with its politically-connected nuclear industry, uneven renewable-energy subsidies, and problem-ridden electricity network change fast enough to reach that target?

The answer, its seems, has more to do with politics and economics than technology or resources.

For instance, Weisheng Zhou, an energy policy specialist at Ritsumeikan University in Kyoto, was unequivocal in saying: “It’s a question of political will. Are we going to do this or not?”

Sven Teske, a member of Greenpeace’s International Climate and Energy Unit in Amsterdam, put it this way: “The main obstacle in Japan until now has been a lack of long-term policy in favor of renewables and their infrastructure.”

This is not the first time Japan has faced a major shift in its electric-power industry. In 1973, the country generated 73 percent of its electricity by burning imported oil. Then the oil shock struck. Prices skyrocketed, power companies shifted to other energy sources and, by 2008, just 12 percent of electricity came from oil, according to government statistics. For the most part, nuclear, coal and natural gas plants filled the gap.

Nuclear power in particular has been heavily subsidized. In 2005, 64 percent of Japan’s energy research and development funding went to nuclear energy, according to International Energy Agency data; renewable energy, at 7.3 percent, got even less than fossil fuels. Last year, the nuclear industry received about ¥430 billion in government funds, of which about ¥110 billion went to communities near nuclear plants, according to the Citizens Nuclear Information Center, a Tokyo-based anti-nuclear organization.

Over time, bureaucrats, politicians and academics became entwined in a powerful pro-nuclear bloc dubbed the “nuclear village.” Many say this has hindered the development of alternatives.

“The nuclear industry has had a lot of political power, so we haven’t been able to get support for major wave- or tidal-power plants,” said Takayuki Nakamura, an ocean-power researcher at Ehime University in Shikoku, who added that he has even joined projects in South Korea to benefit from that country’s more generous research-subsidy system.

Before the Fukushima disaster, 54 nuclear reactors sited at 17 plants supplied about 30 percent of all the country’s electricity. With 14 new reactors planned, nuclear power plants were set to comprise more than half of total power capacity by 2030. (35 reactors are currently idle.)

Meanwhile, despite some early government support, power from solar, wind, geothermal, biomass and hydropower plants with a capacity of 10 MW or less languished at 3.4 percent of the total electricity supply in 2009, according to a report by the Japan Renewable Energy Policy Platform; adding in large hydropower plants brings the figure to about 9 percent, according to government figures.

By last year, Japan was ranked 11th on a Pew Environment Group list of the world’s top investors in renewable energy, well behind the top three of China, Germany and the United States.

Investment is lagging in part because the renewable-power industry faces problems in the domestic market.

In Japan, utilities like Tepco control both the production and distribution of electricity. Hence operators of wind- or solar-farms must sell their electricity to these renewable-energy middlemen. While utilities are required to purchase a small percentage of their electricity from renewable sources (last year about 1.3 percent) — and must pay a premium price of ¥42 per kWh for excess electricity from home photovoltaic panels — they have no incentive or obligation to replace any more of their conventional power with alternatives.

Prime Minister Kan has proposed separating the existing power utilities into companies that produce electricity and ones that distribute it. But Norihiro Okumura, an economist with the Institute of Energy Economics, Japan, says a bigger problem — and one that legislators are currently trying to fix — is that renewable-power producers can’t get a high enough price for their electricity on the wholesale market, where they compete with cheap power from coal, natural gas and nuclear plants.

That’s partly because even though renewable-power costs are falling steadily, technology and production efficiency still need to be improved — and partly because conventional power pricing often conceals environmental and other costs.

According to estimates in a 2010 Agency for Natural Resources and Energy report, generating electricity from coal cost ¥5-¥6.5/kWh and from nuclear reactors, ¥4.8-¥6.2/kWh. Electricity from photovoltaic panels clocked in at ¥49/kWh and that from wind at ¥9-¥14/kWh.

The accuracy of those figures has been heavily criticized because they conceal subsidies and other costs (Ritsumeikan University economist Kenichi Oshima puts nuclear power’s true cost at over ¥12/kWh).

Everyone agrees, however, that renewables struggle in Japan’s current electricity market.

Okumura pointed out that the price balance will shift if ratepayers are forced to pay for the aftermath of the ongoing nuclear disaster and for improvements in nuclear safety. Up till now, the costs of cleaning up nuclear disasters, processing nuclear waste and combating global warming have been left out of both generating costs and electricity bills.

Legislation is currently being debated in the Diet to address some of these problems.

The proposed new law would require utilities to buy all electricity generated by renewable sources (except for solar power from residential roofs, of which utilities would only have to buy the portion not used at home). It would also introduce a feed-in tariff (FIT), requiring utilities to pay a premium price for electricity from solar, wind, geothermal, biomass, and small- and mid-scale hydro-electric plants. The premium would be passed on to utility customers. According to Ministry of Economy, Trade and Industry estimates, this would raise average home electricity bills by a scant ¥200 per month at most.

FITs are common throughout the world; a similar system recently helped Germany leap to the forefront of the solar market.

However, Spanish energy-policy expert and lawyer Javier Garcia-Lomas Gago warned that FITs must be carefully designed. In Spain, a government-funded FIT prompted a boom in the wind-power industry — followed by a crash when the government ran out of money to keep subsidizing it.

“A small policy flaw can create a huge problem in the market,” Gago said.

Japan’s FIT legislation faces opposition from politicians and industries concerned that the price of electricity will rise — and from those in the “nuclear village” who say nuclear reactors are cheap, clean, and reliable power sources. Many of those opponents, however, stand to lose influence and income if the market shifts toward renewables.

“They really are desperate to preserve their monopoly (on political power), no matter what the cost,” said Rikkyo University political economist Andrew DeWit, who has written extensively about Japan’s energy policy.

Nonetheless, in the long term both the economy and the environment may benefit from policies supporting renewable energy.

“Japan lacks fossil-fuel resources, but in 100 years (after we reach peak oil) the whole world will be in the same situation. If Japan really pushes for renewables now, it can lead down the road,” energy-policy expert Zhou said.